Hands in call to arms against regulation

GUY Hands, the chairman of private equity group Terra Firma, yesterday urged members of his industry to push back against “populist moves” to increase regulation.

Hands, speaking at the Super Returns conference in Berlin, said that current moves on both sides of the atlantic to tighten regulation of the private equity industry, would “hamper and constrain the contribution our industry can make to world recovery.”

“While I think we would all admit that our industry made some mistakes over the last several years, I don’t think anyone has argued logically that private equity posed any kind of systematic risk to the economy, or that any firm was too big to fail and these political proposals will not make for a better or safer industry.”

Hands, who is involved in a bitter dispute with Citigroup over the circumstances behind his group’s takeover of the music group EMI, says deal volumes will remain low in 2010.

He said volumes probably won’t pick up much in 2010 because price expectations remain high and because of increasing volatility in equity markets. Already, some private equity firms have had to pull planned IPOs or reprice them to appeal to investors.

However, he pointed to deals such as Kohlberg Kravis Roberts & Co.’s £955m acquisition of Pets At Home in January and the current auction for Kabel Deutschland to the tune of €5bn (£4.4bn) as
evidence that debt is available for potential buyers, though on a limited scale.

Hands declined to comment on the problems at EMI. Terra Firma is asking investors for £100m to avoid defaulting on a loan to EMI. “If ever there was a time when past performance is not going to be an indicator of future performance now is that time,” he said.